Long term assets such as equipment, physical plant, property, and buildings are amongst a company’s most tangible and enduring assets, and their value can readily support financing. Lenders' criteria, appetite, and pricing can vary widely, particularly between banks, non-banks, and private debt lenders. Each lender has their own unique approach to evaluating equipment, construction, and real estate loans.

Equipment Loans and Leasing - Common challenges: 

• Type of equipment
• New or used
• Age, condition
• Installed, assembly
• Useful life and maintenance (or maintenance Capex)
• Liquidation Value
• Industry
• Current and future business cash flow
• Business performance
• Management

Solution

While equipment can appear to be easily quantified and valued, a detailed understanding of the assets, their valuation if liquidated, and how business cash flow can support repayment over a multi-year timeframe is necessary. Because of the long-term nature of these assets, the financing case usually needs to address both the equipment value and the borrower’s cash flow. However, there are certain types of lenders that will place more emphasis on equipment value over repayment ability. However, a full understanding of the business, industry, and management is often required and recommended.

We identify the likeliest financing scenario, expected pricing, and most suitable lender(s). Building a lending case, we draw on our previous experience within this financing class and drill down into the details to ensure alignment with each prospective lending solution.

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